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IAA PortNews is not the author of this article and the editorial opinion can differ from that of the author.

  • Источник: https://www.spglobal.com/platts/en/market-insights/latest-news/

    2021 July 9

    Analysis: Australia's LNG exporters test waters for blue hydrogen amid wider energy transition

    Australia's LNG producers are starting to test the waters for blue hydrogen, but the new fuel is yet to kick off in a big way and several factors will determine its growth trajectory and its place in the repertoire of the country's energy exports.

    So far the biggest case for blue hydrogen, which is produced from reforming natural gas, has been that it could be the pathway for green hydrogen, which is produced from electrolysis, due to lower costs, the ability to scale up volumes quickly, and the usage of the existing infrastructure for LNG supply.
    For oil and gas companies, access to depleted acreage for storing carbon is an advantage, and blue hydrogen can give them an early foothold with customers in Asia to grow the market further.

    The stakes are high – Australian oil and gas companies are in a race with peers in the Middle East that have pilot projects to scale up blue hydrogen, oil majors like Shell are bringing in global technological expertise to lower hydrogen costs, and proponents of green hydrogen advocate taking the plunge without transitioning through blue hydrogen.

    There's also the question of whether Australian LNG companies will look to hydrogen as a substitute for LNG in the long run, or just a diversification strategy, amid the debate about stranded assets.

    "Woodside is not proposing to switch from LNG to hydrogen production; our company strategy encompasses the development and production of both LNG and hydrogen," a company spokeswoman said in response to questions about its hydrogen strategy.

    "Our current portfolio of hydrogen production opportunities involves separate facilities in separate locations from our base LNG export business, but in the general area of existing infrastructure," she said.

    "LNG is needed to meet the Paris Agreement global goals and the growing energy needs of the world's population, but by 2050 we expect hydrogen will be important in the world's energy mix and we intend to be part of that," she added.

    Origin Energy's general manager of future growth Tracey Boyes said natural gas will remain key to global energy transition, especially in hard to abate industries, and its gas business was actively developing decarbonization plans, as a part of which it was investigating opportunities in blue hydrogen.

    "We have long-term supply contracts with LNG customers and are not looking to switch our infrastructure over to hydrogen production in this time; we see the two technologies as complementary in our portfolio," Boyes said.

    At a recent energy conference, Kevin Gallagher, chief executive of Santos and chairman of trade group Australian Petroleum Production & Exploration Association (APPEA), said converting gas into hydrogen "offers the fastest, lowest-cost pathway to a hydrogen economy and, combined with CCS, could put Australia at the forefront of this new industry while the technology for renewable hydrogen evolves and the costs come down."

    Costs, customers and carbon
    Australian companies face the dilemma of when to time their hydrogen investments, and when to decide between blue and green hydrogen, despite the oil and gas sector advocating blue hydrogen as the low-hanging fruit for near-term decarbonization goals in this decade.

    A lot will depend on what customers like Japan are willing to pay for, as some technologies require more investment on the producer end and others on the receiving end.

    "Exporting hydrogen will require capital investment at production plants as well as in the transportation infrastructure. The scale of investment will depend upon the distances and hydrogen delivery mode," said Ankit Sachan, hydrogen analyst at S&P Global Platts Analytics.

    He said Australia has the unique advantage to produce grey (where CO2 is not captured) or blue hydrogen from natural gas in the short term and, as the demand grows, can radically increase investments in green hydrogen.

    "Given the close proximity [to Japan and South Korea], Australia is targeting this future demand and collaborating with others so all can move up the learning curve together," Sachan said, adding that exporting hydrogen in gaseous form over large distances was uneconomic because of low energy density on a volumetric basis.

    Woodside's spokeswoman said there are complementary roles for LNG, blue hydrogen and green hydrogen and "timing comes down to what customers want and are prepared to pay for, as well as the broader policy and regulatory settings in production and customer jurisdictions."

    The medium of transporting hydrogen, whether its liquefied or in the form of compounds like ammonia and hydrides, have different infrastructure considerations and costs.

    "Each suits different markets and has technical/commercial trade-offs. Liquid hydrogen's high purity and boil off suits transport and distributed power. Ammonia is easier to transport and suits centralized power and regasification. Liquid hydrides are stable at room temperature and are suited to seasonal energy storage," the Woodside spokeswoman said.

    "As countries increasingly adopt more ambitious climate targets, demand for low and zero carbon fuels is customer-led. We see export demand for green hydrogen across Asia in the 2030s and as soon as the late 2020s in Japan," Origin's Boyes said.

    Origin said it also has access to low-cost renewable power and expertise in wholesale electricity trading, including demand response and grid services, making green hydrogen production a good fit.